Question
1.What is the total cash flow for Firm A: $75,000 sales, $2,000 cash dividends, $50,000 COGS, $4,000 administrative expenses, $3,000 depreciation expense, $5,500 interest expense,
1.What isthe total cash flowfor Firm A: $75,000 sales, $2,000 cash dividends, $50,000 COGS, $4,000 administrative expenses, $3,000 depreciation expense, $5,500 interest expense, no changes in working capital, and a tax rate of 35%? (I thought I got an answer of $11,126 but now I'm second guessing myself.)
2.What is the plowback ratio in the previous question?
3.A company estimates they will sell 100,000 units (@$10/unit) of a new product every year for four years, starting from year 0. Fixed costs are $400,000 annually. Variable costs are $5/unit. All sales, variable and fixed costs are cash. The new machinery to manufacture the product will cost $360,000 in year 0 and be depreciated straight line over the next threeyears to a zero salvage value. At the end of the project the machinery will be sold for $50,000 and no new sales will occur. The tax rate is 34%. What is the NPV (in year 0) if the project has a 6% OCC?
4.Your firm purchased machinery for $10 million 3 years ago. It has been depreciated straight-line over an assumed 5 year life, but it can now be sold for $5 million. The firms tax rate is 35%. What is the after-tax cash flow from the sale of the equipment?
Anything helps! I've done all of these but I'm not sure about the answers.
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